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Finding a bespoke development model: a major conference held in Kinshasa earlier this year drew together senior government figures, academics and private sector players to debate and brainstorm just how the DR Congo's development might be encouraged.

The DR Congo's government has made a commitment to turn a positive macroeconomic performance into a significantly improved standard of living. Seeking a way of accelerating this aim was the purpose of the economic conference held on 8 and 9 January 2015 in Kinshasa.

Despite the growth of the past few years and the positive macroeconomic figures, the new economic dynamic in the DR Congo does not yet benefit everyone. During the Kinshasa conference, President Joseph Kabila, in collaboration with Harvard University of the US and the Congolese government, met with the world's leading economists to discuss the issue of inclusive growth and learn from successful experiences elsewhere.

In a speech at the conference's opening ceremony, Prime Minister Matata Ponyo Mapon said: "Since 2001, DR Congo has been on the path to growth and hopes to turn the page on the lost years and move towards the status of an emerging economy by 2030."

President Kabila had, the PM said, "taken on an unwavering commitment to work towards a significant improvement in the living conditions of the Congolese people, which implies that growth must have certain fundamental characteristics, including being redistributed fairly and beneficial to the most disadvantaged groups."

The PM added, "My personal belief is that a development model which can be transposed and is applicable to all countries does not exist, because every nation has its own circumstances. However, lessons learned and best practices can be shared." This was precisely the purpose of the conference that brought together academics and political leaders with a view to defining innovative solutions to enable the government to adjust its economic policy.

Analysing and studying best practices

"Finding our way means that we must have a voluntary policy," explains Jean-Baptiste Ntagoma, the Principal Advisor to the PM and head of the conference's organising committee. "The government wants to take control of the development of its country. To this end, it organised an economic conference to ensure that the policy which it has adopted is the right one."

As such, in recent years DR Congo has made significant progress, highlighted by institutional partners and several reports. "Our country has recorded its twelfth year of sustained growth. However, all of these performances have failed to lead to a significant improvement in the living conditions of our people," admits the DR Congo's Minister of Finance, Henry Yav.

"The model based on the export of commodities, mainly mining, has not led to a profound transformation of our economy. This is what justifies the need to make an uncompromising assessment today to study the causes of the weaknesses of our economy in terms of diversification."

Fifty-seven recommendations

Over the two days of discussions at the conference, illustrious professors from Harvard, Stanford, Princeton, the Sorbonne, and Congolese universities delivered their evaluation of the state of the Congolese economy, its strengths and weaknesses, before issuing a set of recommendations, 57 in total, that were given to the government. Many of these are about the need to diversify the economy and lessen the reliance on mining revenues.

The economy's strong dependence on mining, at 45% of GDP, means that the DR Congo places its trust in a capital-intensive sector with a paradoxically low need for labour, to drive its economic development. That is part of the reason that DR Congo's development has been slow.

But there are other factors. These include its history, as Professor Dani Rodrik of Princeton University points out, with the Mobutu regime, the disasters of Zairianisation and looting. "The gap can be closed with employment," he insists. James Robinson of Harvard University agrees, highlighting the importance of the private sector. "Look at the USA, China etc., they developed with the private sector!"

Employment was at the heart of the debate. To change people's lives, they must be given access to decent jobs, and therefore more revenue. It is therefore important to upgrade agricultural activity, in addition to the other recommendations made and to accelerate decentralisation.

Although Mother Nature has bestowed many blessings on the DR Congo, the vastness of its territory, more than two million [km.sup.2], makes the situation complicated. It is therefore necessary to set up institutions at the local level, and build on local political representatives and chiefdoms, as Roger B. Myerson, winner of the Nobel Prize for Economics, points out.

Many of the topics discussed by the speakers such as governance, human capital, improving the business climate, legislation etc. relied on foreign examples to sustain the arguments. These examples were often from emerging countries in Asia or Latin America. The objective was to share best practices.

"The best practice models should be used as a source of inspiration, without necessarily copying them," urged Makhtar Diop, the World Bank Vice President for Africa. "I am convinced that the solutions for development are home-grown solutions. All of the experts here can offer solutions, but [true] understanding of the situation of a country comes from those who live there. We are offering you different sauces, it is up to you to make your own mayonnaise!"

Inclusive growth in the OR Congo

"Now the question is, what are we going to do with all this?" asks John Mususa Ulimwengu, advisor in charge of agriculture. "It is not enough to make recommendations; policy makers have to be able to measure their interest in the country and apply them," he observed, affirming that the government was determined to take advantage of this conference to review its road map. Especially since, according to the last of the 57 recommendations, the exercise must be renewed in one year's time with a new economic conference.

In the meantime, a white paper on inclusive growth in the DR Congo, incorporating the work and recommendations of the conference, is to be published. This will be a solid working base for all those who are working for the socio-economic development of DR Congo, both in the government and elsewhere.

Fostering inclusive growth in the DR Congo, according to five economists

Professor Stefaan Marysse, University of Antwerp

Fighting against the black holes of mining income

Part of the mining revenues should be used to develop the country and ultimately for the well-being of the population, it being understood that the transmission channels between development and social welfare are diverse: employment generated by production, upstream and downstream economic activities of the mining sector, taxes collected to finance public goods and services, etc. In countries such as the DR Congo, the industrial mining sector is capital-intensive, and consists of production units which are often very isolated and generate few local economic activities. The mining sector is not necessarily a curse, it can be a boon if mining income is generated, collected and used properly. Minimising revenue losses is crucial and a necessary condition for development. We have identified five sources of loss, the first and most important is the sale of mining assets below market price. The second is related to the low share of profits from international mining companies that are reinvested in the DR Congo. The third is due to the shortcomings of GECAMINES, which is heavily in debt and has become a marginal producer. The fourth is due to the performance of DGRAD, the central administration responsible for the collection of mining taxes. The fifth lies in the way in which the artisanal mining sector works--the government should realise its contribution to local economic activities. The economic revenue of the mining sector looking at current production (one million tons of copper in 2013) could be at least three times higher than it is today.

Emmanuel Mbi Ebot, Vice President of the African Development Bank (AfDB)

Increasing the share of tax revenues in GDP

Over several years, the DR Congo has been highly successful. Greater integration with global trade and financial networks, coupled with the implementation of coherent medium-term macroeconomic frameworks, structural reforms and the strengthening of economic and social institutions and governance, has allowed the DR Congo to achieve quicker growth than in recent decades. We all know that these gains may be fragile. The persistence of short-term uncertainties in the global economy and turbulence in emerging economies can have a negative impact on the DR Congo. The country needs to invest more in infrastructure and basic services such as education and health care, and expand access to energy and water. It should also eliminate gender disparities and strengthen and develop social welfare nets to reduce risk and vulnerabilities. To achieve these goals, significant financial resources are required. It is essential to increase the share of tax revenues in GDP. The DR Congo could increase its tax revenues by broadening the tax base further, while improving tax compliance and tax collection; involving the private sector more actively on all fronts and identifying innovative financing for large projects.

Dani Rodrik, Economics professor at Harvard

Reindustrialise the DRC

The DR Congo has seen a limited industrialisation, because of the conflict which has ravaged the country. Almost all of the products are imported, which has the advantage of opening up a world of possibilities. Today, industry represents less than 5% of GDP. Over 60% of the population still live in rural areas. Nothing would have more of an impact on poverty than a significant increase in agricultural productivity, by reviving the production crops which were grown historically.

"At the time of independence, Congo was the second largest producer of palm oil in the world, behind Malaysia. Today, the country imports more than 50,000 tons of palm oil. The DR Congo was also the biggest African producer of cotton, with over 180,000t produced by 800,000 small farmers. Today, 6,000t are produced each year, and the cotton industry has all but disappeared. Similarly, the production of rubber, arabica, robusta and tea has also fallen," a 2011 World Bank report states. The potential to exploit palm oil, rubber and cocoa is great even though it is important to remain cautious. A large part of recent growth was due to temporary peaks and the catching-up process. The improvement of the institutional and macroeconomic framework has helped bring stability rather than allowing real economic growth. At best we can hope for a moderate but steady growth level of around 2%. Rapid growth would be very different from the rapid industrialisation that we have experienced so far elsewhere.

Professor Roger Myerson, University of Chicago, Nobel Prize winner 2007

Decentralisation

I am a game theorist. This means that I study the general mathematical models of competition, which allow social scientists to establish links in various economic and political fields. As a game theorist, I consider democratic constitutions as the rules of a game in which politicians are fighting for power. From this perspective, I would argue here that federal decentralisation in a democratic constitution could encourage political leaders to propose a better government to the voters.

After a period of conflict or autocratic rule, democracy may only be possible if there are enough leaders who want to offer a responsible public service, benefiting all citizens. This essential presence of responsible leaders may lead to the establishment of democratic institutions at the local level, where the leaders will prove their worth in order to reach higher positions later on.

However, competition from new local leaders threatens the interests of established national leaders. Therefore, decentralisation reforms are often met with strong resistance from those in power.

Roland Pourtier, geographer and professor at the University Paris 1 Pantheon-Sorbonne.

Infrastructure and communication

During the "decade of chaos" doomsayers were predicting the breakup of the DRC. This has not happened. Does this not mean that there is a sufficiently strong national consciousness to overcome trials and divisions? The country merges with the River Congo. The image of a country merging with the most powerful African river undoubtedly helps the construction of a national identity.

If Congo is so blessed by nature, if it is potentially so rich, why is it so low on the HDI scale? To meet the dual challenge of the vastness of the country and the ruptures that split the finest African network of waterways, colonisers developed the famous river-rail model. Every one of the activity sectors include a spatial dimension.

This is why spatial planning, which is essential for the movement of goods, people, ideas, is an integral part of inclusive development. According to the 2012 World Bank study 'Resilience of an African Giant,' the DRC "faces what is probably the biggest infrastructure challenge and the most formidable that a country on the African continent can undergo."

There is no better conclusion than hammering home the absolute priority of transportation and communication infrastructures, the first condition for sustainable growth and restoration of the state's territorial foundations. This is Congo's challenge for tomorrow!
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Title Annotation:Strategy
Comment:Finding a bespoke development model: a major conference held in Kinshasa earlier this year drew together senior government figures, academics and private sector players to debate and brainstorm just how the DR Congo's development might be encouraged.(Strategy)
Publication:African Business
Geographic Code:6ZAIR
Date:Feb 1, 2015
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